Interest Rate Signals from Fed and ECB Ahead of Jackson Hole Move Global Markets
As global markets focus on messages regarding central banks' interest rate policies, gold prices declined while the dollar and bonds posted gains.
Ahead of the Jackson Hole Economic Policy Symposium, hawkish statements from Fed officials and US inflation data sparked activity in global markets. While the speech to be delivered by Fed Chair Kevin Warsh is awaited, gold prices fell, and the dollar and bond yields rose. Domestically, the CMB announced new priority criteria for large-scale IPOs.
Jackson Hole Symposium and Fed Expectations
At the Jackson Hole Economic Policy Symposium, Fed Chair Kevin Warsh will deliver his first speech as chair. Markets are seeking clues in Warsh's statements regarding the future path of monetary policy. In the US, the personal consumption expenditures price index for July rose 0.2 percent, exceeding expectations and keeping inflation concerns alive.
In money markets, the probability of the Fed keeping the interest rate unchanged next month is priced at 66 percent, while the likelihood of a 25 basis point hike in October is priced at 62 percent. Fed officials Jeffrey Schmid, Beth Hammack, and Susan Collins signaled in their statements that interest rate hikes could be supported depending on the course of inflation.
US Data and Geopolitical Developments
Weekly initial jobless claims in the US decreased by 4,000 to 203,000. Following these data, the US 10-year bond yield rose to 4.69 percent, while the dollar index stabilized at 99.2. The price of gold per ounce dropped 0.5 percent to $4,580, while Brent crude oil stood at $89.2 per barrel.
On the geopolitical front, US President Donald Trump made harsh statements regarding Iran via social media. Trump claimed that he did not want to meet with Iran and that the Tehran administration had requested a deal.
Latest Situation in European and Asian Markets
The latest meeting minutes published by the European Central Bank showed that new interest rate hikes could come onto the agenda if there is no significant improvement in inflation. European stock markets followed a mixed course, with Germany's DAX 40 index rising 0.31 percent, while the UK's FTSE 100 index declined by 0.79 percent.
On the Asian side, core inflation in Japan rising to 2 percent and the unemployment rate falling below expectations reinforced expectations that the Bank of Japan would raise interest rates. Although Nvidia's positive earnings report supported risk appetite, regional stock markets maintained a cautious stance.
Domestic Markets and CMB Regulation
In Borsa Istanbul, the BIST 100 index completed the day with a loss of 0.24 percent at 14,575 points. The Capital Markets Board announced that priority will be given to public offering applications of companies with a market value exceeding 15 billion liras and planning at least 50 percent allocation to foreign investors. In the interbank market, the USD/TRY exchange rate is trading at 48.25.